That NFC trial in London

The conclusion of the mobile phone wallet trial in London, apparently, is that mobile phone payments are highly desirable for consumers. According to FinExtra, the majority - 78% - of the 500 participants said they would be interested in using the service if it was available. And 22% said because they could pay for the Tube by handset they used public transport more.

Now, I, for one, am not surprised that people like the service. YouTube has been running a video for a while now that shows how to dissolve an Oyster (travel) card in acetone and fix the resulting chip to your mobile or anything else you want. I've also heard stories, by the way, of London Underground staff refusing to allow people to travel if they have such a modded version of the card.

But regardless, the point is people are actually hacking their plastic to get it out of their wallets. The same thing will probably happen to non-travel plastic as well as soon as more contactless readers are installed on ATMs and at the point of sale.

Here is the key question for me though. Would I give up my handset - presently an Apple iPhone - which I use for lots of different things, to get some basically functional payments enabled handset instead? Of course not. The first requirement for me is that my choice of handset is available with contactless. I will not be switching to mobile phone contactless otherwise.

So many people have suggested that the key speed bump for NFC and contactless adoption is going to be the availability of places to pay. Well, of course I agree with that, but I'd suggest that an even bigger one is going to be getting consumers to switch handsets just so they can have mobile payment functionality. For myself, I'll just have a contactless card in my wallet and use that instead.

What is needed is that all handsets have the capability for NFC. I'm not giving up my iPhone (and neither would I have given up my Windows Mobile device before this). What I might do, though,  is dissolve my contactless card in acetone and stick the remaining chip to the back of my iPhone.

And what, actually, would be the functional difference if I did?

Comments

[James Moore]

Sticking the Oyster card chip on the back of your phone is one solution (and actually there have been producers of contactless stickers for a while now, as reported here http://www.cardtechnology.com/article.html?id=20060525SGTX241O) , with several banks having tried the idea. A simple solution but it doesn't half seem a waste given what you're attaching it to.

The major handset manufacturers have all said that mid and high tier phones are going to get NFC capability (the chipset shares many similarities with bluetooth). The first major block could be the network operators, they order the phones from the manufacturers and (to an extent) dictate what features get added for the cost. That should hopefully not be too major an issue as the operators are beginning to look relatively engaged with the idea.

The second, and more important block is retailer adoption and the fact that an awful lot has been spent on Chip'n'Pin EPOS upgrades. The biggest problem facing wireless cards is when a customer comes in to one of the signed up stores and finds the terminal sitting in the back room or under the counter 'because no-one uses it'.

Contactless on it's own with a mobile phone isn't that interesting. Contactless on a mobile with additional services provided by the handset (rewards etc) could be the catalyst to kickstart the use.

[Aden Davies]

The NFC Forum should spend some money trying to get Steve Jobs to include NFC in the iPhone v3 then it would really make things interesting. Unless some new regulation forces the upgrades of terminals or someone is willing to pay for them to be upgraded then it will be a long time until this takes off. Add in a few other obstacles (Security, PIN entry on the phone, £10 limit, TSMs etc. etc.) and I think this great tech is going to be in limbo for a little while yet. This article gives a good summary of the current state of play with NFC. http://www.contactless-intelligence.tv/020_ciq4_05.php

[Neil Robinson]

Hmmm. Sticking chips to other devices to create a one-stop shop - or rather a non-stop (being contactless) shop, perhaps?

The term all your eggs in one basket comes to mind, James. Loose that and lose everything. Life's a balance between having too many separate devices and a too valuable single utility to do it all I guess.

Maybe we need a proxy instead. Something we have that other facilities recognise that gives us access to other services on demand. But has no physical value by itself until we activate it, so it would be pointless to steal...

So we sign in once and use an oyster like token for everything we need throughout that day. It gets us on the train, pays for lunch, our phone calls, pulls cash from an ATM, buys us a cinema ticket and so on.

We tell it what we want to use it on in advance and set a limit (to restrict unauthorised use), but it shows no indication of what it can do.

Lose it and phone to cancel it. Simple.

[James Moore]

Neil - The other side of the coin is that having the card within the device gives a certain amount of protection in terms of the management of the device itself, something you don't get with the sticker approach. If you consider where the payment method uses the secure element of a USIM then it benefits from being cancelled at the same time as the USIM itself when blocked by the network operator. Not unlike the various card protection schemes offered by every man and his dog.

Re-provisioning of the payment method becomes cheaper (not free) for the card provider from not requiring plastic, embossing, postage etc and potentially faster for the consumer depending on the time to get a new USIM from the operator.

All that said, there is difficulty in terms of the consumer acceptance. If customer's number one concern is around the security of mobile banking, adding a transactional element is something that needs to be carefully managed. Incidents like the Oyster card hacking etc certainly don't help the case. It would be interested to see exactly how O2 collected it's statistics.

Although perhaps not quite at the level you suggest in terms of pre-authorising spend for a day, it does seem a situation ripe for the prepay card.

[John Copping]

Had a chat with some of the guys from Tower Group on this subject. Putting a sticker on the outside of your phone brings two potentail issues:
one is that the phone is a personal device and some people do not want to damage the look of the phone
two having a sticker on the outside makes the phone a more attractive target for a mugger, as there is a good chance that some "free cash" will be loaded in the chip.
It is probably better to put the chip inside the phone, perhaps inside the battery cover, although this won't work if the cover is made of metal...
Instead of waiting for the phone estate to migrate to new NFC enabled devices, why not just issue new memory sticks (most camera phones have them) with the NFC built in. These would be easier to get out into the market (and the customer could pay for them).
Alternatively, have the NFC device as a lapel badge, or key ring, or...? The recent Democratic convention has already experimented with this idea.

[Andrew Auden]

Personally, I'm somewhat cautious in reading too much into these pilot results...does anyone know the criteria for issuing the handsets? A positive response is almost guaranteed from the 'early adopters' out there.

I already keep my Oyster card seperate from my wallet, as I don't want to be waving my wallet around everytime I use the tube, and I have similar concerns about my expensive new handset as well...

[Aden Davies]

With regards to the location of the NFC element you could just embed it onto the SIM http://www.theregister.co.uk/2008/05/14/true_not_nfc/

Would love to know more about the 'Industry Taskforce' O2 are setting up. I would love to know a lot more about this subject in general come to think of it...

[Steve Beecroft]

To some degree I agree with Andrew Auden’s comments regarding waving around bulging wallets and expensive handsets for all to see. However it isn’t necessary to remove your phone from your jacket pocket or handbag I have been fortunate enough to have firsthand knowledge of a number of the various NFC trials in the UK, one of those being e-ticketing on the London underground and can confirm that this is indeed how the technology operates. So the gates can comfortably read the card through a coat pocket or from the bottom of a handbag.
As for stickers I don’t really see this as a realistic solution. Handset manufacturers have recognised the growing…… demand is perhaps an over confident term but interest is certainly true.
When looking at m-payments it would be naïve for UK banks to be complacent. Yes the technology needs more robust standards to enable interoperability, more choice in handsets and more available applications. The trends, however, point towards a strong future market for m-payments and if you combine at the as yet untapped market of unbanked, the growing demand for prepaid debit and the face that there more mobile phones in circulation than there are ATM’s.

[Education Consultancy]

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